David Saks: Real Estate Practice : Lesson 3700

David Saks - Real Estate Broker - The Real Estate Mart of Tennessee, Inc. - 4040 North Watkins-Suite #4 - Memphis, Tennessee 38127 - Phone (901) 357-4663

Real Estate Practice : Lesson 3700

3

Bankruptcy is a nasty thing.

It destroys families, causes divorce, illness, depression, cripples your creditworthiness, and can put you on the street.

Everyone loses in a bankruptcy:

The lender because the credit that they extended will not be repaid, and you because your credit is destroyed, at least for a few years until you're able to rebuild your creditworthiness, if your lucky enough to do so.

There are several types of bankruptcy, but for our purposes let's look at two of them:


1. Chapter 7 Bankruptcy, which is total bankruptcy, stays on your credit report for 10 years.

2. Chapter 13 Bankruptcy, or Wage Earner, which is kind of a payment plan, and stays on your credit report for 7 years.

Bankruptcy, kind of, is forever. Some Loan applications, and many job applications, will ask you if you have ever filed for bankruptcy.

It's been said that if this question is on the application and you lie to get a loan because your bankruptcy has been discharged, technically you have committed fraud. Attorneys, help us here !

Lenders don't like making loans to people with bankruptcies on their credit profile. Bankruptcy will slam you hard and change your life forever.

Before you file for bankruptcy make sure that you exhaust every possible remedy available to you, including a workout with your lender and a course of counseling with an approved financial advisor or counselor.

Try to work it out before you give up and discover that there's no way out.

Any thoughts?




David Saks



Time&Temp Memphis

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Comment balloon 2 commentsDavid Saks • September 22 2014 02:27AM

Comments

David, You sure are correct about the challenges that a bankruptcy create.  Many attorneys advice their client that it will only be a bumpy road for 7 to 10 years but you are right about some applications do ask the "have you EVER" filed bankruptcy question which I am sure will surprise many of the consumers who have filed in the past.

Posted by Sam Miller, Knox County Ohio Real Estate Specialist (RE/MAX Stars Realty) over 5 years ago

Bankruptcy is a scar for life, Sam, regardless of any other explanation. If the question ever comes up in the application, and a borrower says no, it might spell a criminal charge for the borrower if it's considered a fraudulent misrepresentation in a loan application by a fraud examiner. Even 20 years later. Thanks.

Posted by David Saks ((retired)) over 5 years ago

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